Circle may be a game changer. You can sign-up on your phone from anywhere and purchase your first bitcoins with your credit card within minutes. The fact that they use mandatory 2FA (via SMS by default) also makes me feel better about recommending this service to acquaintances. Should COIN launch this winter, then the fiat <---> bitcoin gateway infrastructure will be ripe to support another wave of adoption.

I still maintain the impact of COIN is being grossly underestimated. The vast majority of "investment dollars" do not sit on bank accounts linked to coinbase or credit card limits linked to circle.

Instead most funds sit in brokerage accounts. During the run where I made most of my purchases, my biggest obstacle was wiring funds from my Brokerage account to my Bank account, so then I could issue a coinbase purchase. Since I see bitcoin as a core asset to hold, this was completely backwards.

COIN will link brokerage accounts to bitcoin, there is a huge amount of funds there....

there is also a huge difference in that you do not actually own bitcoins but COIN shares.

sure some institutional investors might not care. but you are then only "invested" in the Bitcoin economy and not necessarily own an actual share it in. which is perfectly fine, but still....

(I have to say I might be wrong. Could you claim your share in COIN for its equivalent in BTC? I do not think so but maybe someone can confirm.)

I think the shares will be used to purchase BTC so it will roughly track the price of bitcoin. This is at the owners descretion.... so you may see cases where it does not track it. Simply put if its not making money people will not buy shares... but dividends should be offered to entice people to buy shares rather than bitcoin... thats how I kind of guess it works anyway on top of my head knowing how equities work. Because its backed by a regulated exchange, many people will simply hold the shares collecting dividends rather than bitcoin because you would get value on the way up (roughly) and collect interest. For me, personally I prefer to hold bitAssets once the pegs are known to work in bitshares as this will collect me more interest and I own it in a decentralized system rather than depend on a stock exchange susceptible to the pitfals of our modern economy... can happen overnight... its a tradeoff either way.

Some COIN supporters are of the belief that it will SET the price of bitcoin, in much the way that gold ETFs set the price of gold.The significant differences between gold and bitcoin may run squarely counter to this belief. Gold ETFs are useful because storage and transport of that commodity bear costs and risks higher than the ETF ownership, where the opposite is true of COIN. I suspect that often it will influence and follow rather than lead.

There will also be some opportunity for truly massive fiat manipulation of COIN due to its projected high liquidity. In such cases it can be expected to lead price up or down as arbitraging will shift value in and out to the extent that it is trusted.

I suspect that the real time p2p bitcoin exchanges OTC, and localbitcoin and the others will have the highest prices in most cases. As is said of gold, if you don't hold it, you don't own it.

How the hell would you arb COIN with bitcoin? Does it accept bitcoin for shares? If it doesn't then it cant be a leading indicator unless bitcoins are directly convertible to COINS. If COIN shares are used to buy bitcoins then it may be leading indicator as far as seeing volume come into the market, but getting back out would mean selling shares thru COINS and nothing to do with bitcoin, COIN back to fiat... and winklesvoss have to sell the bitcoins they bought at a loss or a premium depending price at the end of the trading day.

Circle may be a game changer. You can sign-up on your phone from anywhere and purchase your first bitcoins with your credit card within minutes. The fact that they use mandatory 2FA (via SMS by default) also makes me feel better about recommending this service to acquaintances. Should COIN launch this winter, then the fiat <---> bitcoin gateway infrastructure will be ripe to support another wave of adoption.

I still maintain the impact of COIN is being grossly underestimated. The vast majority of "investment dollars" do not sit on bank accounts linked to coinbase or credit card limits linked to circle.

Instead most funds sit in brokerage accounts. During the run where I made most of my purchases, my biggest obstacle was wiring funds from my Brokerage account to my Bank account, so then I could issue a coinbase purchase. Since I see bitcoin as a core asset to hold, this was completely backwards.

COIN will link brokerage accounts to bitcoin, there is a huge amount of funds there....

there is also a huge difference in that you do not actually own bitcoins but COIN shares.

sure some institutional investors might not care. but you are then only "invested" in the Bitcoin economy and not necessarily own an actual share it in. which is perfectly fine, but still....

(I have to say I might be wrong. Could you claim your share in COIN for its equivalent in BTC? I do not think so but maybe someone can confirm.)

I think the shares will be used to purchase BTC so it will roughly track the price of bitcoin. This is at the owners descretion.... so you may see cases where it does not track it. Simply put if its not making money people will not buy shares... but dividends should be offered to entice people to buy shares rather than bitcoin... thats how I kind of guess it works anyway on top of my head knowing how equities work. Because its backed by a regulated exchange, many people will simply hold the shares collecting dividends rather than bitcoin because you would get value on the way up (roughly) and collect interest. For me, personally I prefer to hold bitAssets once the pegs are known to work in bitshares as this will collect me more interest and I own it in a decentralized system rather than depend on a stock exchange susceptible to the pitfals of our modern economy... can happen overnight... its a tradeoff either way.

COIN will work just like GLD but using bitcoins as the underlying. If you own COIN shares all it means is that the Winklevoss ETF is holding your BTC for you in trust. If it's cheaper to purchase bitcoins from Bitstamp than the equivalent amount of shares from COIN, then one of the "authorized participants" will simultaneously purchase a "basket" of bitcoins from Bitstamp and short a "basket" of COIN shares on the NASDAQ (giving them a positive cash balance). They will then deliver those bitcoins to the trust (COIN) in exchange for a basket's worth of newly created shares. They will then use these shares to close their short position with a guaranteed profit.

This is the arbitrage mechanism that ensures the NAV of the ETF tracks the underlying.

I see thanks, so you can buy shares with bitcoins then. When you sell do you get bitcoins back or fiat? Is there an official statement about this?

There is some dark humor opportunity here.The US is called a success for its massive QE and rewarded with a strengthening dollar leading up to the UCB decision process of whether and how to delever or leverage up with massive QE of its own.

To me it looks like a head fake. The US has them bamboozled. It is a way of extending others to their breaking point before the US breaks. Some savvy global economic politics at play. Yum yum intoxicating QE candywine for everyone. Who will drink who under the table remains to be seen.

I see thanks, so you can buy shares with bitcoins then. When you sell do you get bitcoins back or fiat?

Only the "authorized participants" (APs) can (they can swap in both directions: bitcoins for shares or shares for bitcoins). But as long as there's a few competing APs, that's all that's actually required to ensure that NAV tracks the underlying (because they're all competing for a small guaranteed arbitrage profit).

I see thanks, so you can buy shares with bitcoins then. When you sell do you get bitcoins back or fiat? Is there an official statement about this?

Only the "authorized participants" (APs) can. But as long as there's a few competing APs, that's all that's actually required to ensure that NAV tracks the underlying (because they're all competing for a small guaranteed arbitrage profit).

Yes, it's all written up in the SEC documents the Winklevoss's filed (or just google how ETFs work in general).

ok cool so these APs are acting as market peg bots essentially guiding the price.. wonder if it holds long term... I guess GLD / SLV are examples of something that has been working. So we can then draw some correlation to the actual bitcoin price once massive volume steps in thru COIN, however we all know the kind of manipulation that will ensue once we are up there in the clouds!

How the hell would you arb COIN with bitcoin? Does it accept bitcoin for shares? If it doesn't then it cant be a leading indicator unless bitcoins are directly convertible to COINS. If COIN shares are used to buy bitcoins then it may be leading indicator as far as seeing volume come into the market, but getting back out would mean selling shares thru COINS and nothing to do with bitcoin, COIN back to fiat... and winklesvoss have to sell the bitcoins they bought at a loss or a premium depending price at the end of the trading day.

Unless you are buying a "basket" of COIN for BTC as an AP you buy through your brokerage, so whether you can buy with BTC for us mere mortals will depend on whether your broker accepts them. I'm not aware of any that do today.

I suspect that the CFTC will treat bitcoin purchases like they treat gold purchases wrt ETF.So selling COIN for USD and buying bitcoin for USD may be subject to wash sale rules.

CFTC hasn't made any official statement, but one of the anticipated regulatory effects of COIN is that large BTC purchases may become reportable to the CFTC for compliance.

As to whether GLD/SLV are working, there are differences of opinion on that as well.

Circle may be a game changer. You can sign-up on your phone from anywhere and purchase your first bitcoins with your credit card within minutes. The fact that they use mandatory 2FA (via SMS by default) also makes me feel better about recommending this service to acquaintances. Should COIN launch this winter, then the fiat <---> bitcoin gateway infrastructure will be ripe to support another wave of adoption.

I still maintain the impact of COIN is being grossly underestimated. The vast majority of "investment dollars" do not sit on bank accounts linked to coinbase or credit card limits linked to circle.

Instead most funds sit in brokerage accounts. During the run where I made most of my purchases, my biggest obstacle was wiring funds from my Brokerage account to my Bank account, so then I could issue a coinbase purchase. Since I see bitcoin as a core asset to hold, this was completely backwards.

COIN will link brokerage accounts to bitcoin, there is a huge amount of funds there....

there is also a huge difference in that you do not actually own bitcoins but COIN shares.

sure some institutional investors might not care. but you are then only "invested" in the Bitcoin economy and not necessarily own an actual share it in. which is perfectly fine, but still....

(I have to say I might be wrong. Could you claim your share in COIN for its equivalent in BTC? I do not think so but maybe someone can confirm.)

I think the shares will be used to purchase BTC so it will roughly track the price of bitcoin. This is at the owners descretion.... so you may see cases where it does not track it. Simply put if its not making money people will not buy shares... but dividends should be offered to entice people to buy shares rather than bitcoin... thats how I kind of guess it works anyway on top of my head knowing how equities work. Because its backed by a regulated exchange, many people will simply hold the shares collecting dividends rather than bitcoin because you would get value on the way up (roughly) and collect interest. For me, personally I prefer to hold bitAssets once the pegs are known to work in bitshares as this will collect me more interest and I own it in a decentralized system rather than depend on a stock exchange susceptible to the pitfals of our modern economy... can happen overnight... its a tradeoff either way.

COIN will work just like GLD but using bitcoins as the underlying. If you own COIN shares all it means is that the Winklevoss ETF is holding your BTC for you in trust. If it's cheaper to purchase bitcoins from Bitstamp than the equivalent amount of shares from COIN, then one of the "authorized participants" will simultaneously purchase a "basket" of bitcoins from Bitstamp and short a "basket" of COIN shares on the NASDAQ (giving them a positive cash balance). They will then deliver those bitcoins to the trust (COIN) in exchange for a basket's worth of newly created shares. They will then use these shares to close their short position with a guaranteed profit.

This is the arbitrage mechanism that ensures the NAV of the ETF tracks the underlying.

COIN will work just like GLD but using bitcoins as the underlying. If you own COIN shares all it means is that the Winklevoss ETF is holding your BTC for you in trust. If it's cheaper to purchase bitcoins from Bitstamp than the equivalent amount of shares from COIN, then one of the "authorized participants" will simultaneously purchase a "basket" of bitcoins from Bitstamp and short a "basket" of COIN shares on the NASDAQ (giving them a positive cash balance). They will then deliver those bitcoins to the trust (COIN) in exchange for a basket's worth of newly created shares. They will then use these shares to close their short position with a guaranteed profit.

This is the arbitrage mechanism that ensures the NAV of the ETF tracks the underlying.

COIN will work just like GLD but using bitcoins as the underlying. If you own COIN shares all it means is that the Winklevoss ETF is holding your BTC for you in trust. If it's cheaper to purchase bitcoins from Bitstamp than the equivalent amount of shares from COIN, then one of the "authorized participants" will simultaneously purchase a "basket" of bitcoins from Bitstamp and short a "basket" of COIN shares on the NASDAQ (giving them a positive cash balance). They will then deliver those bitcoins to the trust (COIN) in exchange for a basket's worth of newly created shares. They will then use these shares to close their short position with a guaranteed profit.

This is the arbitrage mechanism that ensures the NAV of the ETF tracks the underlying.

COIN will work just like GLD but using bitcoins as the underlying. If you own COIN shares all it means is that the Winklevoss ETF is holding your BTC for you in trust. If it's cheaper to purchase bitcoins from Bitstamp than the equivalent amount of shares from COIN, then one of the "authorized participants" will simultaneously purchase a "basket" of bitcoins from Bitstamp and short a "basket" of COIN shares on the NASDAQ (giving them a positive cash balance). They will then deliver those bitcoins to the trust (COIN) in exchange for a basket's worth of newly created shares. They will then use these shares to close their short position with a guaranteed profit.

This is the arbitrage mechanism that ensures the NAV of the ETF tracks the underlying.

Peter, is this similar to the way SecondMarket will handle things?

Sorry, but I don't know how SecondMarket handles things.

It is different. SecondMarket has a freer structure.

SecondMarket buys BTC OTC heavily discounted. They trade on their reputation to get better rates than most exchanges, only in worst case to they buy through exchanges.

I see thanks, so you can buy shares with bitcoins then. When you sell do you get bitcoins back or fiat? Is there an official statement about this?

Only the "authorized participants" (APs) can. But as long as there's a few competing APs, that's all that's actually required to ensure that NAV tracks the underlying (because they're all competing for a small guaranteed arbitrage profit).

Yes, it's all written up in the SEC documents the Winklevoss's filed (or just google how ETFs work in general).

ok cool so these APs are acting as market peg bots essentially guiding the price.. wonder if it holds long term... I guess GLD / SLV are examples of something that has been working. So we can then draw some correlation to the actual bitcoin price once massive volume steps in thru COIN, however we all know the kind of manipulation that will ensue once we are up there in the clouds!

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

I see thanks, so you can buy shares with bitcoins then. When you sell do you get bitcoins back or fiat? Is there an official statement about this?

Only the "authorized participants" (APs) can. But as long as there's a few competing APs, that's all that's actually required to ensure that NAV tracks the underlying (because they're all competing for a small guaranteed arbitrage profit).

Yes, it's all written up in the SEC documents the Winklevoss's filed (or just google how ETFs work in general).

ok cool so these APs are acting as market peg bots essentially guiding the price.. wonder if it holds long term... I guess GLD / SLV are examples of something that has been working. So we can then draw some correlation to the actual bitcoin price once massive volume steps in thru COIN, however we all know the kind of manipulation that will ensue once we are up there in the clouds!

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

If settlement is done via BTC this is bullish and best case scenario IMO because any volume input will count as aggregate volume towards the buy side. The initial volume will be all bullish.

I see thanks, so you can buy shares with bitcoins then. When you sell do you get bitcoins back or fiat? Is there an official statement about this?

Only the "authorized participants" (APs) can. But as long as there's a few competing APs, that's all that's actually required to ensure that NAV tracks the underlying (because they're all competing for a small guaranteed arbitrage profit).

Yes, it's all written up in the SEC documents the Winklevoss's filed (or just google how ETFs work in general).

ok cool so these APs are acting as market peg bots essentially guiding the price.. wonder if it holds long term... I guess GLD / SLV are examples of something that has been working. So we can then draw some correlation to the actual bitcoin price once massive volume steps in thru COIN, however we all know the kind of manipulation that will ensue once we are up there in the clouds!

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

If settlement is done via BTC this is bullish and best case scenario IMO because any volume input will count as aggregate volume towards the buy side. The initial volume will be all bullish.

Thanks for the explanation. Seems like a definite positive if it gets off the ground.

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

What makes you think GLD doesn't hold gold bars (you mention COMEX futures)? I agree that there's a few sketchy details, but the GLD prospectus indicates that the custodian (HSBC) is responsible for safekeeping of physical bars of gold.

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

What makes you think GLD doesn't hold gold bars (you mention COMEX futures)? I agree that there's a few sketchy details, but the GLD prospectus indicates that the custodian (HSBC) is responsible for safekeeping of physical bars of gold.

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

What makes you think GLD doesn't hold gold bars (you mention COMEX futures)? I agree that there's a few sketchy details, but the GLD prospectus indicates that the custodian (HSBC) is responsible for safekeeping of physical bars of gold.

GLD does hold physical metal, but it is not 100%, it is more like 10% (at least the last time I checked). GLD will add physical bars, but the vast majority of the daily tracking process is APs buying and selling COMEX futures into / out of GLD, which make up around 90% of GLD's assets (again I'm going off of memory here).

This is why Sprott Physical Gold Trust PHYS is differentiated. PHYS holds 100% (OK something like 99%) of assets as physical bars held in the name of the trust.

My understanding is the mechanics of COIN will be similar to GLD / SLV, in that it is an open ended ETF, but that is where the similarities end.

With GLD / SLV the underlying asset is quite different. With GLD/SLV you are really trading gold and silver COMEX futures , not physical gold or silver itself. The difference is since the FED and banks can create paper gold on demand and COMEX settles contracts in dollars (not real metal), then what you are really buying through GLD is a gold future that is settled in dollars. The FED can create this contract out of the air and then sell and deliver this contract in printed dollars. (This is a game that continues until the market demands physical metal)

With COIN settlement is in real BTC on the blockchain, not paper printed contracts. There are no paper printed products in Bitcoin. Our market today does not understand how to deal with a fixed supply asset like this anymore, so the only thing we can expect is lots of volatility, my personal expectation is that volatility will mostly be in one direction...

What makes you think GLD doesn't hold gold bars (you mention COMEX futures)? I agree that there's a few sketchy details, but the GLD prospectus indicates that the custodian (HSBC) is responsible for safekeeping of physical bars of gold.

GLD does hold physical metal, but it is not 100%, it is more like 10% (at least the last time I checked). GLD will add physical bars, but the vast majority of the daily tracking process is APs buying and selling COMEX futures into / out of GLD, which make up around 90% of GLD's assets (again I'm going off of memory here).

Regardless of the precise details, you've brought up a good point: with COIN, the trust and the custodian are the same entity. With GLD, this is not the case.